Laserfiche WebLink
City of San Leandro <br />Notes to Basic Financial Statements <br />For the year ended June 30, 2013 <br />NOTE 2 - CASH AND INVESTMENTS (Continued) <br />The City valued its investments in LAIF as of June 30, 2013, at the market value. The fair value is <br />calculated by multiplying the account balance with LAIF times a fair value factor of 1.0002732 which is <br />determined by LAIF. This fair value factor was determined by dividing all LAIF participants' total <br />aggregate amortized cost by total aggregate fair value. <br />The City's investments with Local Agency Investment Funds (LAIF) at June 30, 2013, included a portion of <br />the pool funds invested in Structured Notes and Asset -Backed Securities. These investments included the <br />following: <br />• Structured Notes are debt securities (other than asset-backed securities) whose cash-flow <br />characteristics (coupon rate, redemption amount, or stated maturity) depend on one or more <br />indices and/or that have embedded forwards or options. <br />• Asset-backed Securities, the bulk of which are mortgage-backed securities, entitle their <br />purchasers to receive a share of the cash flows from a pool of assets such as principal and interest <br />repayments from a pool of mortgages (such as CMOs) or credit card receivables. <br />Concentration of Credit Risk <br />The City's Policy states that the investment portfolio shall be designed with the objective of attaining a <br />rate of return throughout budgetary and economic cycles, commensurate with the City's investment risk <br />constraints and the cash flow characteristic of the portfolio. Purchases of mutual funds must not exceed <br />20% of the value of the portfolio. <br />Investments in U.S. agencies exceed 5% of total portfolio, and Federal agency investments exhibited <br />below exceeded 5% percent or more of the total investments in any one issuer: <br />U.S. Agencies <br />Amount <br />Invested <br />Percentage of <br />Investments <br />Federal agency securities: <br />Federal Home Loan Banks (FHLB) <br />$6,137,436 <br />7.33% <br />Federal Home Loan Mortgage Corporation <br />5,017,010 <br />6.00% <br />Federal National Mortgage Association(FNMA) <br />4,268,179 <br />5.10% <br />Total <br />$15,422,625 <br />18.43% <br />Disclosures Relating to Credit Risk <br />Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder <br />of the investment. This is measured by the assignment of a rating by a nationally recognized statistical <br />rating organization. Presented below is the minimum rating required by (where applicable) the California <br />Government Code, the Entity's investment policy, or debt agreements, and the actual rating as of year-end <br />for each investment type. <br />54 <br />